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Textile Sector of Pakistan

Pakistan’s textile industry is thought of as one of the most important sectors for country’s’ economic growth. It
greatly contributes to industrial exports. Over the years, this sector has shown varied results for a host of
reasons. Recently, the sector suffers from high manufacturing costs, energy shortages and lack of government
support. The main segments of this sector are apparel and ready-made garments, textile apparel, and
processing sectors. Although most textile sales are made in developed countries abroad, this sector still lags
behind its competitors in the South Asian region, and has not fully realized its potential, especially in recent
years.

Some major hurdles faced in the industry are as follows:

Shortage of raw Lack of government

Economic Crisis
materials support
• Macro-economic • Cotton production • Change of
conditions was 11million bales governments
• Slow-down in in FY 2012-13. • Inconsistent policies
production • Dropped to 5.3 • Lack of government
• Global bump in million bales in FY support
supply and demand 2020-21
• Covid 19 • Textile requirements
16 million bales.

The textile sector has no choice but to import raw cotton from the United States, Brazil and Egypt. The reasons
for this tragic decline are poor profitability, poor seed quality, lack of technology and innovation, all of which
threaten the livelihoods of producers and the survival of the textile sector.

The textile sector is in the process of recovering from Covid 19 ripples, and exports in 2021 surged as compared
to 2020. However, this growth has been achieved by imports of cotton and artificial yarn. Covid19 is can be
thought of as a blessing for the textile industry as global buyers are increasingly looking to Pakistan by reducing
orders to local players. Almost all of the country's major players are expanding their capabilities, especially to
accommodate the growing export orders. Progressive initiatives of the Government supported textile sector in
bouncing back:

The government has significantly reduced tariffs and taxes on the import of hundreds of raw materials in order to
reduce the input costs of exportable goods. In addition, the release of timely funds significantly solves liquidity
issues. Budget of 2021-22 proposed several measures, including tariff reductions on raw materials to promote
exports of value-added pharmaceuticals, plastics, chemicals, engineering and textiles.

It is very important that the government is focused on improving the skills of exporters by improving market
access and availability of key inputs and promoting competition and innovation within the industry. However, it is
imperative to consider current policies that promote the creation of value, with the transfer of technology to
Pakistan and the spillover effects that can promote and drive desirable economic growth in various industries.
Free trade agreements can play an important role in promoting trade, especially if they are aimed at increasing
participation in global and regional value chains. To avoid the balance of payments crisis, it is imperative that
policy makers focus on export growth rather than restricting imports.